Digital Magic: How Eric Ries Brought The Startup Way to GE

Silicon Valley is famous for developing products in sprints, failing fast and trying again — a cycle that, superficially at least, bears little resemblance to the painstaking, multiyear process of building big industrial machines.

Yet, when the entrepreneur and author Eric Ries first visited GE in 2012, he envisioned possibilities for how the company could apply the Silicon Valley playbook to the development of a new engine. The idea was to make the designers think more like they were working for a startup.

In his newest book, The Startup Way, Ries describes how he started working with GE. In his words, he shifted the conversation from “can this product be built?” to “should this product be built?” It was the beginning of GE’s creation of FastWorks, a process designed to get products out fast, learn and iterate, and then adjust the design.

The first challenge was to test what Ries calls the team’s “leap-of-faith assumptions” about the engine: What percentage efficiency gains were customers looking for? Would the company sell or lease the product?

Top and above: Ries shifted the conversation from “can this product be built?” to “should this product be built?” Images credit: GE.

In the same way Facebook might beta test a new feature on a small group of users, GE’s engineers came up with a plan: They would modify one existing engine so it would do what they wanted. They could make this “minimum viable product,” or MVP, in six months instead of five years. “What Eric really helped us think about was how do we identify what the customer wants?” said Viv Goldstein, GE’s global director of Innovation Acceleration and co-founder of FastWorks. “How do you learn from your experiment? How do you make progress? Don’t assume you know the answer.”

The mantra of FastWorks soon spread. Goldstein noted that she ceased counting FastWorks projects at 800 because the method had become so embedded in the organization.

In a recent interview, Ries recalled one of his favorite FastWorks success stories, not with product developers but with a 25-person IT team supporting a finance department. When Ries started talking about adopting a customer-service mentality to deliver a tool that company employees would want to use, “I was afraid they were going to laugh me out of the room,” he said. “They said, ‘What do you mean, customer? If we tell everybody they have to do this, they’re going to do it.’”

But after a few days of FastWorks training, the team consolidated down to five people who would be fully dedicated to the project and began thinking of employees as customers. They offered different divisions the chance to be early adopters of the new product and promised to roll out a new version of the tool every month that the users could take or leave. “It’s one of my favorite stories because nobody believes it,” Ries said. “These people started acting like entrepreneurs.”

Ries said that when companies give their employees the freedom to experiment with new solutions, get results fast, tinker and try again, work becomes more than just work — it becomes something people are personally invested in. That’s what keeps innovation going, he said.

This is also a key to one of GE’s current efforts: digital transformation. “Real digital transformation is almost indistinguishable from magic — it’s incredible when it works,” Ries said. “But it can’t be outsourced or delegated. In order to do digital transformation, you have to approach it like a managerial problem: How do I rebuild my company for continuous innovation?”